Microsoft is investing $5.5 million in research and development on a pilot project that will use biogas from a wastewater facility to power cloud services.

Microsoft will use the test project to learn how to apply clean power sources like biogas to its other large data centers. The project also will demonstrate the company's flexibility in locating future data centers, Microsoft said in a blog post revealing details about the project. In theory, that means Microsoft could build data centers next to other possible clean power sources, such as landfills, wastewater treatment plants or even near dairy farms, where methane gas from cows could be used to power fuel cell power plants.

The so-called Data Plant will be located at the Dry Creek Water Reclamation Facility in Cheyenne, Wyoming. The company has tapped FuelCell Energy to install a fuel cell power plant that operates off of biogas generated from the wastewater facility.The fuel cell power plant will be installed at the wastewater facility by spring 2013, FuelCell Energy said.

Microsoft first publicly floated its Data Plant concept back in April. Although the idea has been batted around since at least 2010 when Microsoft's Data Center Services manager Christian Belady began talking about combining power plants and data centers at industry speaking engagements.

This fuel cell plant will provide 200 kilowatts of power for Microsoft's Data Plant. Excess power not used by the data center will be provided to the water reclamation facility to offset their electric costs. In the event of a grid outage, the project and fuel cell plant will operate independently to provide continuous power, FuelCell Energy said.